CHINA’S main over-the-counter (OTC) equity market will improve its trading mechanism by introducing auction trading, in an apparent effort to boost liquidity.

The National Equities Exchange and Quotations (NEEQ) published Friday new rules on discriminative treatment of companies that traded on the New Third Board and on information disclosure.

China launched the OTC equity board in 2015, hoping it would become a hotbed of innovation. But after initial excitement, the market slumped, before entering a prolonged decline, strangled by thin liquidity.

An index tracking the board Friday fell to a record low of 987.8741 points, down more than 60 percent from its 2015 peak.

Starting Jan. 15, negotiation-based share transfers during the trading session would be scrapped and replaced by call auction trading, general manager Li Ming, told a news conference in Beijing.

Qualified firms can also choose equity trading via market makers, while negotiation-based share transfers would only be allowed outside the trading session.

Call auction trading, a mechanism adopted by stock exchanges, is expected to make the OTC board more liquid.

(SD-Agencies)